PRESENTATION FULL-YEAR 2017 RESULTS 1 Strictly confidential
IMPORTANT NOTICE This presentation includes forward-looking information and Although we believe that its expectations reflected in any statements, including statements concerning the outlook for such forward-looking statement are based upon reasonable our business. These statements are based on current assumptions, it can give no assurance that those expectations, estimates and projections about the factors expectations will be achieved. This presentation contains that may affect our future performance, including the non-GAAP measures of performance. We provide economic conditions in the property markets relevant to us. definitions of these measures and reconciliations between These expectations, estimates and projections are generally these measures and their IFRS counterparts as we believe identifiable by statements containing words such as are appropriate. “expects,” “believes,” “estimates,” “targets,” “plans,” “outlook” or similar expressions. There are numerous risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this presentation and which could affect our ability to achieve any or all of our stated targets. The important factors that could cause such differences include, among others: – business risks associated with the volatile economic environment and political conditions – costs associated with natural disasters affecting our properties – changes in governmental regulations – changes in currency exchange and interest rates, and – such other factors as may be discussed from time to time in prospectuses 2 Strictly confidential
AGENDA APRIL 13, 2018 Key achievements Financials Portfolio and growth strategy Outlook Q&A 3 Strictly confidential
TODAY’S SPEAKERS MANUEL LEUTHOLD JAUME SABATER MARTOS PATRICK RICHARD ■ ■ Delegate of the Board of ■ Chairman, Vice Chairman, Directors, Varia US Varia US Properties AG Varia US Properties AG Properties AG ■ CEO of Stoneweg SA, ■ Head of US Investments the Asset Manager of of Stoneweg SA, Varia US Properties AG the Asset Manager of Varia US Properties AG 4 Strictly confidential
KEY ACHIEVEMENTS 5 Strictly confidential
2017 KEY ACHIEVEMENTS (1/2) ■ GROWTH ■ Size of the portfolio doubled ■ Full investment of the equity raised at IPO by end of June ■ Value-add strategy implemented ■ Strong real estate market ■ Average leverage of 60.52% ■ Average interest rate of 4.19% ■ DISTRIBUTION AND PERFORMANCE ■ USD 4.15 earnings per share (including a USD 4.8M profit from tax reform. Earnings per share without tax reform impact would be USD 3.4) ■ NAV growth to USD 34.38 (2016: USD 33.65) ■ CHF 3.45 distributed in 2017 ■ Share price increase by 9.53% 6 Strictly confidential
2017 KEY ACHIEVEMENTS (2/2) ■ CONSOLIDATION ■ Reinforced acquisition and asset management team in the US ■ Additional resources for the Board of Directors ■ Strong reputation in the real estate market 7 Strictly confidential
FINANCIALS FY 2017 8 Strictly confidential
2017 KEY FIGURES (1/2) TOTAL EFFECTIVE FAIR VALUE GROSS PORTFOLIO INCOME 2016: USD 64.6 million INCOME ADJUSTMENT 2016: USD 39.1 million 2016: USD 21.2 million 65.8 22.4 88.2 USD USD USD million million million TOTAL REPAIR AND YEAR I OPERATING CAPEX BELOW CAPEX EXPENSES THRESHOLD INVESTED 2016: USD 33.9 million 2016: USD 5.8 million 2016: No data 39.2 4.9 6.9 USD USD USD million million million 9 Strictly confidential
2017 KEY FIGURES (2/2) EARNINGS NET PROFIT OPERATING FOR THE PER SHARE 2016: USD 3.37 PROFIT PERIOD 2016: USD 30.6 million 2016: USD 16.2 million 48.9 34.9 4.15 USD USD USD million million NAV NAV PER SHARE PER SHARE 2016: USD 33.65 (EXCLUDING DEFERRED TAXES) 2016: USD 35.93 34.38 35.74 USD USD 10 Strictly confidential
PROFIT AND LOSS (CONSOLIDATED) Period from Sept. 28, 2015 In USD million As of December 31, 2017 through Dec. 31, 2016 Rental income 59.9 36.5 Other income 5.8 2.6 Bargain on purchase of subsidiary - 4.2 Net gain from fair value adjustment on invest. property 22.4 21.2 Total income 88.2 64.6 Total operating expenses 39.2 33.9 Operating profit 48.9 30.6 Profit before income tax 35.7 22.0 Profit for the period 34.9 16.2 Profit attributable to: Varia US Properties AG shareholders (in USD million) 28.1 8.9 Non-controlling interests (in USD million) 6.8 7.3 NAV & Earnings per share Net asset value (NAV) per share (in USD) 34.38 33.65 Basic and diluted earnings per share (in USD) 4.15 3.37 11 Strictly confidential
FINANCIAL POSITION (CONSOLIDATED) Assets in USD million As of December 31, 2017 As of December 31, 2016 Total current assets 94.7 98.0 Total non-current assets 573.5 351.8 Total assets 668.2 449.8 Liabilities and equity in USD million As of December 31, 2017 As of December 31, 2016 Total current liabilities 47.3 8.7 Total non-current liabilities 350.6 216.2 Total liabilities 397.9 224.8 Equity attributable to Varia US Properties AG 247.6 208.4 shareholders Non-Controlling Interest (NCI) 22.8 16.6 Total equity 270.4 225.0 Total liabilities and equity 668.2 449.8 12 Strictly confidential
OPERATING RESULTS (not audited) As of December 31, 2017 As of December 31, 2016 In USD million Realized income 65.8 39.1 Total Operating expenses (36.5) (19.2) Net Operating Income 29.3 19.9 Finance cost (13.6) (8.4) Operating results before taxes and 15.7 9.0 exceptional Expensed capex (2.6) (2.6) Exceptional expenses/gain 0.2 (9.9) Realized operating profit 13.3 (3.6) Non realized profit 22.4 25.4 Tax provision (0.8) (5.7) Profit attributable to Non-Controlling Interests (6.8) (7.3) Profit attributable to Varia 28.1 8.9 13 Strictly confidential
PORTFOLIO AND GROWTH STRATEGY 14 Strictly confidential
THREE INDIVIDUAL INVESTMENT STRATEGIES ■ Investment in US multifamily real estate properties situated in strong urban locations in supply-constrained markets ■ Mid- to long-term investment perspective through three individual investment strategies: Value A Value-adding strategy Acquisition, refurbishment, improvement and optimizing operations of real estate properties to maximize rent potential and increase long-term value B and C products: 15-35 years old buildings well maintained Stabilized property* with potential to add value through refurbishments allowing rent increases Apartments specifically built for the American workforce Value-adding Transition strategy for rent restricted properties B (LIHTC) Market rent property* Transition of rent and income restricted properties to non- restricted status over a defined multi-year period Transition C Strategy for stabilized properties LIHTC Further optimization of revenues and operating expenses sometimes coupled with opportunistic "value-add" to a Time stabilized base * Cycle-optimized disposals possible 15 Strictly confidential
PORTFOLIO DEVELOPMENT ■ Portfolio value of USD 617.9 million ■ 50 assets ■ 8,245 units ■ 18 different States in the US ■ Florida down to 24% (2016: 41%) ■ Geographical diversification ■ Larger assets ■ Closer to metropolitan areas 16 Strictly confidential
PORTFOLIO 2017 KEY FIGURES (1/2) AVERAGE GROSS MONTHLY POTENTIAL RENT PER UNIT INCOME 2016: USD 674 2016: USD 49.7 million 716 83.9 USD USD million AVERAGE MARKET OCCUPANCY VALUE PER UNIT RATE 2016: USD 64,160 2016: 95.5% 74,950 94.3% USD 17 Strictly confidential
PORTFOLIO 2017 KEY FIGURES (2/2) NET ANNUALIZED CASH FLOW CASH FLOW 2016: USD 8.2 million 2016: USD 8.6 million 16.7 19.7 USD USD million million CASH ON CASH ANNUALIZED YIELD CASH ON CASH 2016: 7.7% YIELD 2016: 8.37% 7.82% 9.22% 18 Strictly confidential
PORTFOLIO GROWTH IN 2017 Washington Maine North Seattle to Portland Minnesota Dakota Montana Vermont Oregon South Wisconsin New York Dakota Idaho Michigan Wyoming Pennsylvania Iowa Nebraska Ohio Indianapolis, Louisville Nevada Maryland West Indiana Sacramento, Reno Illinois Virginia Virginia Colorado Utah Missouri Kentucky Kansas North Carolina California Arizona Tennessee Oklahoma South Carolina Arkansas Las Vegas, Phoenix Alabama Richmond, Atlanta, New Raleigh-Durham Mexico Mississippi Texas Georgia Dallas, San Antonio Louisiana States with Varia properties Jacksonville Varia properties Florida New acquisitions 2017 19 Strictly confidential
ADDING VALUE TO THE PORTFOLIO ▪ In 2017, a total of 239 units have been rehabbed (compared to the plan of rehabbing 207 units) ▪ An average rent increase of USD 107 per month has been achieved, resulting in a rent uplift of more than 10% (average rents are close to USD 850 per month in rehabbed units) ▪ The average rehab cost per unit is USD 4,921 ▪ ROCE ranges from 16% to 35% at each property, which is ahead of schedule ▪ Average ROCE 26% 20 Strictly confidential
REHABBED UNITS 21 Strictly confidential
STRONG PERFORMANCE OF 2017 PORTFOLIO 22 Strictly confidential
OUTLOOK 23 Strictly confidential
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